EU treaty tackles debt, spending

Tuesday

Jan 31, 2012 at 12:01 AMJan 31, 2012 at 11:48 AM

BRUSSELS - All countries in the European Union, except Britain and the Czech Republic, agreed yesterday to sign a new treaty designed to stop overspending in the eurozone and put an end to the bloc's crippling debt crisis, while also pledging to stimulate growth across the region.

BRUSSELS — All countries in the European Union, except Britain and the Czech Republic, agreed yesterday to sign a new treaty designed to stop overspending in the eurozone and put an end to the bloc’s crippling debt crisis, while also pledging to stimulate growth across the region.

The new treaty, known as the fiscal compact, was agreed upon at a summit of European leaders in Brussels. It includes strict debt brakes and makes it more difficult for deficit sinners to escape sanctions. The 17-country eurozone hopes that the tighter rules will convince investors that all countries will get their debts under control and restore confidence in their joint currency.

“We have a majority of 25 that will now sign up to the fiscal compact,” Swedish Prime Minister Fredrik Reinfeldt said after the summit.

Although the new rules apply only to the 17 euro states, the currency union hoped to get broad support from the other EU states, with the desired aim of eventually integrating the accord into the main EU treaty.

Britain had said in December that it wouldn’t sign the new treaty. Reinfeldt said that the Czech Republic didn’t sign up because of parliamentary procedural problems.

The summit also promised yesterday to stimulate growth and create jobs across the region, in a tacit acknowledgment that exclusive focus on austerity has had painful side effects.

“Yes we need discipline, but we also need growth,” said Jose Manuel Barroso, the president of the European Commission.

The leaders pledged to offer more training for young people to ease their transition to the work force, and to deploy unused development funds to create jobs. However, there was no offer of any new financial stimulus.

“We must do more to get Europe out of the crisis,” the leaders said in a statement.